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I am about to purchase a server for my company. Our company requires 20 servers to run each application in each. My idea is rather than buying 20 servers it will be better to buy 2 highend servers in which 1st server will be divided into 20 VPS parts and the 2nd is dedicated backend server. Is this a good practice or should I purchase 20 servers to run 20 applications in each?

Which will be better for me? By running VPS will other VPS resources will get low performance?

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As usual, "it depends".

in my experience, usually disk io rate is the first bottleneck on the host, but this may not be the case for you, it all depends on the load profile of your application.

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